3 Management Mistakes That Crush Innovation
Take Seattle for example. On Monday the Seattle City Council addressed their struggle to regulate the growing number of on-demand transportation options in the city. These new types of businesses do not fit within Seattle’s archaic regulations – for example, which cabs can be flagged off the street, which cabs must be pre-arranged, which cabs can pick up at the airport, (which are NOT the same cabs that can take people TO the airport).
The council voted to limit the number of taxis that can operate under each service (Uber, Lyft, Sidecar, etc.), blocking the way of progress in the transportation service market in order to preserve the outdated taxi-service business model.
The city defends their decision based on economic issues and an inability to regulate (i.e. collect taxes), stating on their web site, “the number of customers is growing as are questions about potential risks from insufficiently insured drivers, uninspected vehicles and inexperienced drivers. At the same time, entrants threaten economics of existing Taxi, For-Hire and Limo drivers and owners, which can be seen as a significant social justice issue as many drivers depend on their income to support their families.’
This backward thinking smacks of complacency. While Greg Gottesman’s piece “To Protect Legitimate Interests, Seattle Should Cap All Forms of Innovation Immediately,” jokingly suggested putting a cap on the number of emails people can send in order to maintain business for the U.S. Postal Service, the council’s decision set a threatening precedent that’s alarming to many, including the the tech industry.
While you may shake your head and dismiss this as a case of small-minded politicians making short-sighted decisions, look around your organization and you may recognize cases where the fastest and most efficient way for your people to handle change was to stifle it. You may even recognize actions you’ve taken in the past that, while they pleased those clinging to the status quo, dismissed a window of opportunity. Of course, what’s not said is that these types of decisions are a glaring indicator of complacency – that nothing needs to change – and ultimately enough of these decisions creates a ripe opportunity for a smaller, more nimble, and more innovative company to come on the scene and eat your lunch.
Here are three mistakes many leaders don’t even know they’re making, that lead them down this road:
- Avoiding innovation in order to push profitability = failure. Take Kodak. They’ve been pointed to as the poster-company for what happens when you fail to embrace change in your market. People within Kodak tried to draw company leaders’ attention to the world of digital cameras evolving outside the company. Company leaders decided that the financial outlook of the world of digital cameras wasn’t nearly as attractive as the world of continued film sales. They bet it all that nothing would change, and it was a costly bet. We all know how that story ended. Companies must be willing to “bring the outside in” in order to see threats on the horizon and avoid inevitable disaster.Complacency, or remaining satisfied with the status quo, is a glaring sign of danger.
- Attempting to “manage” threats illustrates that you’re still in denial. In Seattle, putting a cap on the number of taxis that can run under the Lyft pink mustache will make it easier for the city to regulate taxis and collect their taxes, but the growth in this industry is fueled by demand. With so many people wanting to use the service, and with the city so backward in their ability to regulate and collect taxes, ultimately it may cost the city more to enforce their regulations than they’re making in this business. Their strategy only prolongs the archaic regulatory structure, and slows growth of a new economy that serves the people faster, better, and for less money.
- Failing to address threats makes the company vulnerable to those threats. After years of denial that the Internet was going to kill their industry, the music distribution business is near rock bottom. A decade ago these companies ruled the music industry, but they failed to recognize the very real threat of music piracy and the willingness of the mass population to embrace the ease and relatively minimal risk of pirating music. Refusing to address that threat cost them dearly. Spotify, a not-so-new streaming music service that is poised to become the future lifeblood of the music industry recognized that in order for music distribution to become profitable again, it must become easier than pirating the songs online. This service provides free (but limited) fast, streaming access to millions of popular songs (with help from the now desperate music industry), and unlimited access for a fee.
This is written on the Stockholm office wall of Daniel Ek, co-founder of Spotify:
“THE REASONABLE MAN ADAPTS TO THE WORLD; THE UNREASONABLE ONE PERSISTS IN TRYING TO ADAPT THE WORLD TO HIMSELF. THEREFORE, ALL PROGRESS DEPENDS ON THE UNREASONABLE MAN.”
– GEORGE BERNARD SHAW
When your company is trying to force customers to adapt to it, customers will seek out, find, and adapt to alternatives. The organizations that make it easier for customers to adapt the world to themselves are the ones that will achieve success.
~ Curated by The Marketing Curator and TME Pass The Idea (www.pass-the-idea.com)